Effect of inflation on EOQ model with multivariate demand and partial backlogging and carbon tax policy

Abstract

The concept of green inventory systems is very important for economic growth and development in the era of sustainable development. There is a special need for green inventory systems to identify and manage perishable products since spoilage and deterioration can lead to significant losses of items, which negatively affect the satisfaction of consumers. As perishable products decay continuously (such as vegetables, fruits, milk, juices, frozen foods, baked foods), their demand is adversely affected as well as customers' purchasing decisions. The more realistic assumption is a price-sensitive demand. As well as deterioration rates, perishable products have an expiration date-dependent deterioration rate. Further, inventory holding, and the deterioration of perishables contribute significantly to carbon emissions when operating the inventory system. A carbon tax policy is more flexible and effective when it comes to reducing carbon emissions due to its environmental conscious nature. We develop two sustainable inventory procedures for perishable items based on a practical scenario in which the buyer has a limited storeroom. So, to achieve sustainability goals, a model for inventory management for perishable products based on expiration dates is presented in this paper. We distinguish between two inventory schemes: (i) one that allows shortages and fractional backlogs, and (ii) one that does not allow shortage. In both schemes, both the decay rate and demand function show an upward trend against storage time. Since the decay rate increases with storage time, it is assumed that the cost of storing items is linearly related to storage time. numerical examples along with a real-life case study are presented to validate the inventory schemes after several decision-making findings have been derived.